Substitute Senate Bill No. 1193
Substitute Senate Bill No. 1193
PUBLIC ACT NO. 97-70
AN ACT CONCERNING LIMITED LIABILITY COMPANIES.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. Subdivision (7) of section 34-101
of the general statutes is repealed and the
following is substituted in lieu thereof:
(7) "Foreign limited liability company" means
an entity that is: [(A) An unincorporated
association; (B) organized] (A) ORGANIZED under
the laws of a state other than the laws of this
state or under the laws of any foreign country;
[(C)] (B) organized under a statute pursuant to
which an [association] ENTITY denominated as a
limited liability company may be formed that
affords to each of its members limited liability
with respect to the liabilities of the entity; and
[(D)] (C) is not required to be registered or
organized under any statute of this state other
than sections 34-100 to 34-242, inclusive, AS
AMENDED BY THIS ACT.
Sec. 2. Subdivision (9) of section 34-101 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(9) "Limited liability company" or "domestic
limited liability company" means an organization
having [two] ONE or more members that is formed
under sections 34-100 to 34-242, inclusive, AS
AMENDED BY THIS ACT.
Sec. 3. Section 34-113 of the general
statutes is repealed and the following is
substituted in lieu thereof:
A limited liability company formed under
sections 34-100 to 34-242, inclusive, AS AMENDED
BY THIS ACT, or a foreign limited liability
company transacting business in this state
pursuant to the provisions of said sections shall
be treated, for purposes of taxes imposed by the
laws of the state or any political subdivision
thereof, in accordance with the classification
[under 26 C.F.R. Section 301.7701-2] FOR FEDERAL
TAX PURPOSES.
Sec. 4. Section 34-121 of the general
statutes is repealed and the following is
substituted in lieu thereof:
The articles of organization of a limited
liability company formed under sections 34-100 to
34-242, inclusive, AS AMENDED BY THIS ACT, shall
set forth: (1) A name for the limited liability
company that satisfies the requirements of section
34-102; [(2) the latest date upon which the
limited liability company is to dissolve; (3)] (2)
if management of the limited liability company is
vested in a manager or managers, a statement to
that effect; [(4)] (3) the nature of the business
to be transacted or the purposes to be promoted or
carried out, except that it shall be sufficient to
state, either alone or with other business or
purposes, that the purpose of the limited
liability company is to engage in any lawful act
or activity for which limited liability companies
may be formed under sections 34-100 to 34-242,
inclusive, AS AMENDED BY THIS ACT, and by such
statement all lawful acts and activities shall be
within the purposes of the limited liability
company, except for express limitations, if any;
[(5)] (4) the principal office address of the
limited liability company; [(6)] (5) an
appointment of a statutory agent for service of
process as required by section 34-104; and [(7)]
(6) any other matter the organizer or organizers
determine to include.
Sec. 5. Section 34-159 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Upon the occurrence of an event of
dissociation under section 34-180, AS AMENDED BY
SECTION 8 OF THIS ACT, [which does not cause
dissolution,] other than an event of dissociation
as provided in subparagraph (B) of subdivision (3)
of subsection (a) of said section, a dissociating
member is entitled to receive any distribution
which the member was entitled to receive prior to
the event of dissociation. [If an operating
agreement does not provide the amount or a method
of determining the distribution or the manner of
payment of the distribution to a dissociating
member, the member shall receive, within a
reasonable time after dissociation, the fair value
of the member's interest in the limited liability
company as of the date of dissociation based upon
the member's right to share in distributions from
the limited liability company.] UNLESS OTHERWISE
PROVIDED IN WRITING IN THE ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT, OR AS
OTHERWISE PROVIDED IN SUBSECTION (b) OF SECTION
34-173, AS AMENDED BY SECTION 7 OF THIS ACT, THE
DISSOCIATING MEMBER SHALL NOT BE ENTITLED TO
PAYMENT FOR THE MEMBER'S INTEREST IN THE LIMITED
LIABILITY COMPANY AND, BEGINNING ON THE DATE OF
DISSOCIATION, THE DISSOCIATING MEMBER SHALL HAVE
ONLY THE RIGHTS OF AN ASSIGNEE OF THE DISSOCIATING
MEMBER'S INTEREST IN THE LIMITED LIABILITY COMPANY
AND THE DISSOCIATING MEMBER SHALL NO LONGER BE A
MEMBER OF THE LIMITED LIABILITY COMPANY.
(b) NOTWITHSTANDING ANY PROVISION OF
SUBSECTION (a) OF THIS SECTION, DISTRIBUTIONS TO
MEMBERS UPON AN EVENT OF DISSOCIATION OCCURRING IN
LIMITED LIABILITY COMPANIES FORMED UNDER THE LAWS
OF THIS STATE PRIOR TO THE EFFECTIVE DATE OF THIS
ACT SHALL, UNLESS THE MEMBERS UNANIMOUSLY INCLUDE
A PROVISION IN A WRITTEN OPERATING AGREEMENT
EXPRESSLY ADOPTING THE PROVISIONS OF SUBSECTION
(a) OF THIS SECTION, AS AMENDED BY THIS ACT, BE
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF
THIS SECTION IN EFFECT PRIOR TO THE EFFECTIVE DATE
OF THIS ACT.
Sec. 6. Section 34-172 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Subject to subsections (b) and (c) of
section 34-119, an assignee of an interest in a
limited liability company may become a member if
and to the extent that (1) the assignor gives the
assignee that right in accordance with authority
described in the operating agreement, [or] (2)
unless otherwise provided in writing in an
operating agreement, at least a majority in
interest of the members, other than the assignor,
consent, OR (3) IF THE LIMITED LIABILITY COMPANY
HAS ONLY ONE MEMBER, THE ASSIGNOR GIVES THE
ASSIGNEE THE RIGHT TO BECOME A MEMBER.
(b) An assignee who becomes a member has, to
the extent assigned, the rights and powers, and is
subject to the restrictions and liabilities, of a
member under the articles of organization, any
operating agreement and the provisions of sections
34-100 to 34-242, inclusive, AS AMENDED BY THIS
ACT. An assignee who becomes a member also is
liable for any obligations of the assignor to make
contributions under section 34-151. The assignee
is not obligated for liabilities of which the
assignee had no knowledge at the time the assignee
became a member and which could not be ascertained
from any written records of the limited liability
company kept pursuant to section 34-144.
(c) Whether or not an assignee of a
membership interest becomes a member, the assignor
is not released from his liability to the limited
liability company under section 34-151, unless
otherwise provided in writing in the operating
agreement or unless the other members unanimously
consent.
(d) Except as otherwise provided in writing
in the operating agreement, a member who assigns
his entire limited liability company membership
interest ceases to be a member or to have the
power to exercise any rights of a member when any
assignee of his interest becomes a member with
respect to the assigned interest.
Sec. 7. Section 34-173 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) [If] SUBJECT TO SUBSECTION (b) OF THIS
SECTION, IF a member who is an individual dies or
a court of competent jurisdiction adjudges him to
be incompetent to manage his person or his
property, the member's executor, administrator,
guardian, conservator or other legal
representative may exercise all of the member's
rights for the purpose of settling the member's
estate or administering the member's property,
including any power the member had under the
articles of organization or an operating agreement
to give an assignment of the right to become a
member. [If] SUBJECT TO SUBSECTION (b) OF THIS
SECTION, IF a member is a corporation, trust or
other entity and is dissolved or terminated, the
power of that member may be exercised by its legal
representative or successor.
(b) SUBJECT TO SUBSECTIONS (b) AND (c) OF
SECTION 34-119, IF A LIMITED LIABILITY COMPANY HAS
ONLY ONE MEMBER AND AN EVENT OF DISSOCIATION
OCCURS, OTHER THAN AN EVENT OF DISSOCIATION AS
PROVIDED IN SUBPARAGRAPH (B) OF SUBDIVISION (3) OF
SUBSECTION (a) OF SECTION 34-180, AS AMENDED BY
SECTION 8 OF THIS ACT, THE LEGAL REPRESENTATIVE OR
OTHER SUCCESSOR IN INTEREST MAY, AT THE ELECTION
OF SUCH LEGAL REPRESENTATIVE OR OTHER SUCCESSOR IN
INTEREST, BECOME A MEMBER.
Sec. 8. Section 34-180 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) [A] SUBJECT TO SUBSECTION (b) OF SECTION
34-173, AS AMENDED BY SECTION 7 OF THIS ACT, A
person ceases to be a member of a limited
liability company upon the occurrence of one or
more of the following events: (1) The member
withdraws by voluntary act from the limited
liability company as provided in subsection (c) of
this section; (2) the member ceases to be a member
of the limited liability company as provided in
section 34-172, AS AMENDED BY SECTION 6 OF THIS
ACT; (3) the member is removed as a member (A) in
accordance with the operating agreement, or (B)
unless otherwise provided in writing in the
operating agreement, when the member assigns all
of his interest in the limited liability company
with the written consent or by an affirmative vote
of a majority in interest of the members who have
not assigned their interests; (4) unless otherwise
provided in writing in the operating agreement or
by written consent of all members at the time, the
member (A) makes an assignment for the benefit of
creditors, (B) files a voluntary petition in
bankruptcy; (C) is adjudicated a bankrupt or
insolvent; (D) files a petition or answer seeking
for himself any reorganization, arrangement,
composition, readjustment, liquidation,
dissolution or similar relief under any statute,
law or regulation; (E) files an answer or other
pleading admitting or failing to contest the
material allegations of a petition filed against
him in any proceeding of this nature; or (F)
seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator
of the member of all or any substantial part of
his properties; (5) unless otherwise provided in
writing in the operating agreement, or by written
consent of all members at the time, one hundred
twenty days after the commencement of any
proceeding against the member seeking
reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, the
proceeding has not been dismissed, or if within
ninety days after the appointment without his
consent or acquiescence of a trustee, receiver or
liquidator of the member or of all or any
substantial part of his properties, the
appointment is not vacated or stayed, or within
ninety days after the expiration of any stay, the
appointment is not vacated; (6) unless otherwise
provided in writing in the operating agreement, or
by written consent of all members at the time, in
the case of a member who is an individual: (A) His
death, or (B) the entry of an order by a court of
competent jurisdiction adjudicating him
incompetent to manage his person or his estate;
(7) unless otherwise provided in writing in the
operating agreement, or by written consent of all
members at the time, in the case of a member that
is a trust or is acting as a member by virtue of
being a trustee of a trust, the termination of the
trust, but not merely the substitution of a new
trustee; (8) unless otherwise provided in writing
in the operating agreement, or by written consent
of all members at the time, in the case of a
member that is a separate limited liability
company, the dissolution and commencement of
winding up of the separate limited liability
company; (9) unless otherwise provided in writing
in the operating agreement, or by written consent
of all members at the time, in the case of a
member that is a corporation, the filing of a
certificate of dissolution or the equivalent for
the corporation or the revocation of its charter
and the lapse of ninety days after notice to the
corporation of revocation without reinstatement of
its charter; (10) unless otherwise provided in
writing in the operating agreement, or by written
consent of all members at the time, in the case of
a member that is an estate, the distribution by
the fiduciary of a member that is the estate's
entire interest in the limited liability company;
or (11) where the limited liability company is
formed to render professional services, a member
licensed or otherwise authorized to render
professional services in this state or any other
jurisdiction ceases to be so licensed or
authorized.
(b) The members may provide in writing in the
operating agreement for other events the
occurrence of which result in a person ceasing to
be a member of the limited liability company.
(c) Unless the operating agreement provides
in writing that a member has no power to withdraw
by voluntary act from a limited liability company,
the member may do so at any time by giving thirty
days' written notice to the other members, or such
other notice as provided for in writing in the
operating agreement. If the member has the power
to withdraw but the withdrawal is a breach of the
operating agreement, or the withdrawal occurs as a
result of otherwise wrongful conduct of the
member, the limited liability company may recover
from the withdrawing member damages for breach of
the operating agreement or as a result of the
wrongful conduct, including the reasonable cost of
obtaining replacement of the services the
withdrawn member was obligated to perform and may
offset the damages against the amount otherwise
distributable to such member, in addition to
pursuing any remedies provided for in the
operating agreement or otherwise available under
applicable law. Unless otherwise provided in the
operating agreement, in the case of a limited
liability company for a definite term or
particular undertaking, a withdrawal by a member
before the expiration of that term or the
completion of that undertaking is a breach of the
operating agreement.
Sec. 9. Section 34-200 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) A general or limited partnership that has
been converted to a limited liability company
pursuant to section 34-199 shall be deemed for all
purposes the same entity that existed before the
conversion, except that the converted entity, its
members and managers shall be governed solely by
the provisions of sections 34-100 to 34-242,
inclusive, AS AMENDED BY THIS ACT.
(b) The conversion shall take effect upon
[endorsement of the Secretary of the State] THE
FORMATION OF THE LIMITED LIABILITY COMPANY as
provided by section 34-123. Upon such effective
date: (1) All property owned by the converting
general or limited partnership remains vested in
the converted entity; (2) all obligations of the
converting general or limited partnership continue
as obligations of the converted entity; (3) an
action or proceeding pending against the
converting general or limited partnership may be
continued as if the conversion had not occurred;
(4) an action or proceeding pending against any
person in such person's capacity as a general
partner in a converting general or limited
partnership may be continued as if the conversion
had not occurred; and (5) all liabilities of any
person in such person's capacity as a general
partner in a converting general or limited
partnership, notwithstanding the value of the
assets of the converting general or limited
partnership on such effective date, shall continue
as liabilities of such person, except as may be
provided in the operating agreement with respect
to those liabilities of such person to other
members of the limited liability company that has
been converted pursuant to section 34-199.
(c) In the case of a limited partnership that
has been converted pursuant to section 34-199, the
articles of organization filed pursuant to said
section shall serve as a certificate of
cancellation of the converting limited partnership
pursuant to section 34-32a.
Sec. 10. Section 34-206 of the general
statutes is repealed and the following is
substituted in lieu thereof:
A limited liability company is dissolved and
its affairs shall be wound up upon the happening
of the first to occur of the following: (1) At the
time or upon the occurrence of events specified in
writing in the articles of organization or
operating agreement; (2) [written consent] UNLESS
OTHERWISE PROVIDED IN WRITING IN THE ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT, UPON THE
AFFIRMATIVE VOTE, APPROVAL OR CONSENT of at least
a majority in interest of the members; [(3) an
event of dissociation of a member, unless (A)
within ninety days following the occurrence of any
such event either (i) the business of the limited
liability company is continued by the consent of
at least a majority in interest of the remaining
members or (ii) if there is only one remaining
member, such remaining member consents to continue
the business of the limited liability company and
admits an additional member, or (B) otherwise as
provided in writing in the operating agreement;]
or [(4)] (3) entry of a decree of judicial
dissolution under section 34-207.
Sec. 11. This act shall take effect from its
passage.
Approved May 27, 1997